Prices


In the Nov. 15 issue of Wine Enthusiast — “We’re No. 2!” — editor and publisher Adam Strum writes in his editorial that “prices of wine have actually decreased over the past years while quality has definitely improved.”

Is this statement true?

Strum repeats that “prices for wine are going down while quality is increasing across the board.” He continues: “Think about the flavor, mouthfeel and balance of a $10 wine 10 years ago and today. I’ll be glad to answer for you: No comparison. It’s just as dollarsign_01.jpg true at the $15 and $20 level. You can buy truly excellent, world-class wine now for $20 where 10 years ago that same amount would not have delivered the same quality.”

“The reason for this,” he says, “is competition.”

So, the issue doesn’t seem to be that prices for wine are going down, but that better wine is available in the $10 niche (or $15 or $20). It’s true that if one bottle of wine costs $10 and another costs $50, the average price is $30, while if four bottles of wine cost $10 and one bottle costs $50, the average price is $18. Those figures add up to more cheap wine on the market on average but not decreasing prices for wine in general. Of course Strum is writing in Wine Enthusiast’s “Special Value Issue,” so he has a bit of an ax to grind, and there’s not a thing wrong with that; it’s his magazine, and many terrific inexpensive wines are reviewed in this issue. I mean, I like to discover a great little cheap wine as much as the next person does.

Anyway, I disagree that inexpensive wines are necessarily getting better; some $10 and $11 wines from Australia actually aren’t as good now as they were 10 years ago; the specter of sameness and anonymity has fallen upon them. I do agree that we need to look to Spain, southern Italy and Argentina for the best values in cheap wines.

The truth, however, is that wine prices are going up, despite lots of cheap wine being available. If you’ve been buying wine or writing about wine for 20 years or longer, you know that this is the case. Just over the past decade, vineyard land has gotten more expensive, grapes have gotten more expensive and so have French oak barrels.

Perhaps one winery will serve as an example of the trend.

Morgan Winery was founded in Monterey County in 1982 by Dan Lee, who had made wine for Durney Vineyards and Jekel Vineyards. At first he concentrated on chardonnay, sauvignon blanc and several pinot noirs from Carneros and Monterey. Gradually, Lee turned Morgan into primarily an estate winery with the best wines derived from designated vineyards in what is now the Santa Lucia Highlands appellation. While I have quibbled from time to time about the amount of oak that might influence a particular wine — Lee is generally quite judicious with new oak — or feeling that a wine wasn’t up to the quality of its predecessors, I am usually grateful to try Morgan’s wines for their varietal purity, intensity and integrity.

Let’s look at the prices of a few wines from the Morgan stable for the past 10 years. I don’t mean this as a criticism of the winery but as an illustration of price trends in California.

The suggested retail price of the Morgan Sauvignon Blanc 1998 was $12; for vintage 2006, it’s $16, not a huge increase (33%) but still there.

When Morgan’s Cote du Crow’s Rhone-style blend of syrah and grenache debuted with the 2001 vintage, the wine cost $13; the price of the recently released Cote du Crow’s 2006 is $20, an increase of about 53% over five years. Morgan’s Metallico Chardonnay, which also debuted with the 2001 vintage, was originally priced at $20 and has only gone up to $22 with the 2006 version.

Morgan’s best pinot noirs come from Gary’s Vineyards, Rosella’s Vineyard and the Double L Vineyard. For 2000, their suggested retail prices were $38, $38 and $42 respectively; for 2005, the latest year, they’re all $55. (I’ll admit that I was startled when I saw those price sheets.) Now these wines are produced in very limited quantities, usually no more than 300 or 400 cases. Still over six vintages, they show an increase of 44% for Gary’s and Rosella’s and about 30% for Double L.

I realize that this comparison is not only simple but verges on simplistic. Still in a decade that has seen health-care costs and housing costs soar, it shouldn’t be surprising that it costs more money to make wine, considering the factors of land prices, maintenance, barrels (that damned euro!), marketing, wages and storage.

So, I think that Strum is optimistic when he says that prices are falling and quality is rising. If those conditions do come about, I’ll be first in line to toast to better days.

Since you asked, burgundy is so freakin’ expensive because of this equation:

Reputation + Rarity x That Damned Euro = Big Bucks! armandauxey.jpg

The issue arises because I posted Sunday on KoeppelOnWine.com reviews of 17 burgundies from 2005 and one from 2004, all rated Excellent or Exceptional and being exemplars of what great wines from Burgundy should be. It’s not just a footnote or an aside that the wines are really expensive. When “village” wines from Burgundy cost up to — I swear that I’m not making this up — $90 a bottle, that’s mind-boggling.

And here’s a brief, almost simplistic explanation of the scheme by which Burgundy operates, then we’ll get back to the Reputation, Rarity, Euro thing.

Burgundy, in the department of the Cote d’Or in eastern France, is a slender ribbon of mainly tiny villages and vineyards running dujacmorey.jpg slightly southwest for about 30 miles from the city of Dijon. A line of southeastward-facing hills and declivities runs along this same ribbon; the best vineyards tend to be found about halfway up these hillsides.

The vineyards and wines of Burgundy can be divided — and again, I’m simplifying — into four levels.

(1) The basic wines of Burgundy are labeled Bourgogne. They are made from grapes grown wherever vineyards are approved, in other words not just in somebody’s backyard. Bourgogne accounts for about 52 percent of the region’s production.

(2) The first important classification, village wines are made from officially permitted vineyards surrounding the individual villages of Burgundy. The wines take the names of the villages and occasionally the traditional name of a vineyard. If you see a label that says only Gevrey-Chambertin or Puligny-Montrachet or Volnay, it’s a village wine. The implication is that these wines fit not only by deuxmontille.jpg nomenclature but by quality into a third tier, but that’s not always the case. Some of the village wines that I reviewed recently are splendid. Village wines make up about 36 percent of Burgundy production.

(3) The next level consists of wines made from Premier Cru (“First Growth”) vineyards. Labels for these wines will have the name of the village AND the name of the vineyard, hence Gevrey-Chambertin Clos-Saint-Jacques or Puligny-Montrachet Les Caillerets. The words “Premier Cru” must also appear on the label. To tell you how complicated Burgundy can get, Gevrey-Chambertin, a village for red wine, has 26 Premier Cru vineyards, while Puligny-Montrachet, a village for white wine, has 23. Altogether, gevrey.jpg Burgundy holds 562 Premier Cru vineyards, and if you think that’s a lot, you’re right. It would be good to winnow the never-heard-from, the under-achievers, the unduly-rewarded. Premier Cru vineyards producer about 11 percent of the region’s wines.

(4) The apotheosis of Burgundy wines is found in the Grand Cru (“Great Growth”) vineyards, of which there are 31. Only the name of the Grand Cru vineyard appears on the label, as in Le Chambertin or Le Montrachet, along with the designation Grand Cru. This ultimate level accounts for about 1 percent of the region’s production.

So, first, Reputation. Let’s state the case frankly: The best chardonnay and pinot noir wines in the world come from Burgundy’s Premier Cru and Grand Cru vineyards. All the wines of Burgundy don’t attain greatness, of course; there are good years and bad years, meticulous producers and careless producers. Yes pinot noir and chardonnay in some areas of California, yes pinot noir in Oregon’a Willamette Valley, yes, a hint of success for pinot noir in New Zealand, but the best chardonnay and pinot noir wines from Burgundy are simply the best anywhere.

Second, rarity. In Burgundy, a vineyard of 25 or 30 acres is considered large. Most Premier Cru and Grand Cru vineyards are tiny, two or three acres, five or 10 acres, so production is limited. The appellation of Volnay, for example, holds 35 Premier Cru vineyards that encompass 237.76 acres. The production from all of Volnay’s Premier Cru vineyards averages 5,800 cases annually, a figure at which most estates in Bordeaux or wineries in California would scoff. In gagnard.jpg addition, the best Premier Cru and Grand Cru vineyards often are owned by several or even many producers; it happens that one fine producer may own a few rows of vines in one vineyard and a few rows of vines in another vineyard and make, in an abundant year, 25 or 50 cases each of an avidly sought-after wine. The method that determines which restaurants and which collectors in Europe and America (and increasingly in China and Japan) may purchase one or two precious bottles of these fabulous wines is arcane and probably unfair, but that’s what capitalism is all about, the concatenation of fiduciary prowess. The point is, there’s not enough fine Burgundy to go around. That’s why Madame Bize-Leroy can charge $900 for a bottle of her Le Montrachet and get it.

Finally, that blasted euro is dealing dirty to our dollar. It takes $1.416 to buy one euro, or, to put it the other way around, a euro is worth a measly 71 cents. When you account for that exchange rate and consider the costs the wine accumulates as it travels from the producer in Burgundy to the broker in Paris to the importer in New York to the wholesale distributor in whatever lucky grosnuits.jpg city can get a case (or a few bottles) to the retail store, well, you’re talking about wads o’ dough. And 2005 is a superb year in Burgundy, especially for pinot noir, the best vintage, in fact, in a generation. Nobody’s exactly tempering their prices from euphoria, as in “Sacre bleu, it’s such a great year and we made such great wines, let’s lower prices for our American customers that we love so much!”

That’s not the way the world works. It’s all supply ‘n’ demand out there, and it ain’t pretty.

Imagine that you are a bottle of Chianti, created from grapes won by soil and climate and human sweat from a mori-chianti03.jpg well-tended vineyard on a picturesque Tuscan hillside, nurtured in a winery with educated craft and hard-earned knowledge, bottled and corked and sent out into the world with hopeful expectation.

How do you — the bottle of Chianti — get from that sun-burnished hillside, that ancient stone winery, to a table in a city in the United States of America? mori-chianticastelrotto01.jpg
You take a circuitous path. There’s the broker in Florence who makes the deal with the importer in New York that brings the wine on a boat and, if you’re lucky, in a refrigerated container, called a “reefer,” to these shores. The importer has contracts with wholesale distributors in many states, though perhaps not all over the country if it’s a small importer, and ships the wine by truck — and if you’re lucky it’s a refrigerated truck — to various cities within its territory. The wholesale distributors in those cities, in turn, sell the wine — you, the bottle of Chianti — to retail stores, restaurants and bars with whom it has dealings. And in one of those stores, somebody buys you and takes you home.

Think of the costs involved: The cost of farming the grapes and making and aging and bottling the wine; the cost of trucking it to a seaport where it’s loading onto a ship; the cost of unloading the wine and taking it to the importer’s warehouse; the cost of promoting the wine, paying the marketing firm for advertising or at least for setting up a few lunches for journalists and retailers and restaurant people; the cost of shipping the wine inland, to Albany and Baltimore, to Philadelphia and Pittsburgh, Louisville and Atlanta. The cost to the wholesaler of storing the wine — and too many wholesalers, by the way, do not have chill-rooms for wine — and paying their employees who are out hitting the stores and restaurants to sell the wine, and finally the retailer, who has rent and insurance and overtime and so on.

It seems like a miracle that we can still buy nifty little Spanish and Italian wines for $8 and $10. It also seems as if the guy getting the short end of the stick is the farmer working in the vineyard.

Anyway, I bring up these matters, and specifically the bottle of Chianti, because I recently bought at a retail store in Memphis, a bottle of Chianti 2003 produced by the firm of Giacomo Mori. Let me say this right now: In almost 23 years of writing about wine, this is the best “basic” Chianti level wine I have encountered; it’s a model, an exemplar, of what Chianti ought to be.

Let me remind readers, briefly, that three levels of Chianti exist: First (and so familiarly) is Chianti, produced in a large area of that name between Florence and Siena, large enough that quality varies widely. The image of Chianti as a light, cheap acidic wine consumed in inexpensive Italian restaurants, dripping candles stuck into the empty bottles, persisted for generations and perhaps has finally faded, because quality is improving. Next is Chianti Classico, a smaller region (though perhaps too large for consistent quality) in which the blend of grapes and barrel aging are subject to regulation, as is the case with the smaller and theoretically more prestigious category, Chianti Classico Riserva.

So, the point is that I bought this Giacomo Mori Chianti 2003, and it turned out to be terrific. It’s packed with spice, black fruit flavor and floral elements, all of these of the fresh and dried nature, as well as black tea, orange rind and soft, chewy well-integrated tannins. Unlike so many red wines in Tuscany today, this one is aged in large casks, not small oak barrels, so there’s little oak influence. The chief character here: Lovely purity and intensity, balance and integration.

The average retail price for this wine is $19 or $20, though an Internet search revealed princes ranging from $15 to $23. Whoa, FK, you’re saying, I like my Chianti to run about $12 or $14. I mean, we’re talking about a simple, basic wine here.

I understand that, but there’s nothing simple about the quality, the authenticity or the integrity of this wine. I think it’s definitely worth $20.

On the other hand, I paid $34, and I’m pretty steamed about that.

As I have pointed out in this post, myriad factors contribute to the cost of a bottle of wine in its progress from birth to the customer’s wine-glass, and I don’t expect a wine made in California or shipped in to New York to cost the same in Memphis as in those places. But a little better ratio would be nice. I recently wrote with high praise, for example, on this blog and on my website about the Logan Sleepy Hollow Vineyard Chardonnay 2005, from Monterey County. The suggested retail price is $18; I paid $20. OK, two bucks more. I can live with that.

However, charging $14 more for a bottle of wine than the average national price seems not just, well, downright mean but counter-productive. The retailer may be justified in passing on his expenses and the cost from the wholesaler to the customer, but how many consumers, realizing that they have paid 70 percent more for a wine than the average price, will decide not to shop at that store?

The Giacomo Mori Chiantis — there’s also an excellent single-vineyard “Castelrotto” — are Marc de Grazia Selections imported by Vin DeVino in Chicago.